Bosnia: An Ethnic Veto in Competition Law Enforcement?

Bosnia and Herzegovina

Bosnia: An Ethnic Veto in Competition Law Enforcement?

A peculiarity of competition law enforcement in Bosnia and Herzegovina is what could be called an ‘ethnic veto’ – there has to be a sort of an ethnic consensus within the Bosnian competition authority in order for any decision to be adopted. And, combined with the rules limiting the maximum duration of proceedings before the Competition Council, this in practice may lead to the blockade in the watchdog’s competition law enforcement.

The Composition of the Competition Council: 2-2-2

The Bosnian Competition Council has six members in total, which are appointed as follows:

  • three members (one from each of the three major ethnic groups in Bosnia – Bosniak, Croat, and Serb) are appointed by the central government;
  • two members are appointed by the Federation of Bosnia and Herzegovina (the part of Bosnia predominantly populated by Bosniaks and Croats); and
  • one member is appointed by the government of the predominantly Serbian part of Bosnia and Herzegovina (Republika Srpska).

In practice, this means that the three ethnic groups have two representatives each in the Council.

The Ethnic Vote Rule: The Possibility of a Veto

According to the Bosnian Competition Act, in order for the Competition Council to render a decision, at least five Council members must be present, and a majority of the present members must vote for the decision. With one additional condition: in order for a decision to be passed, at least one representative of each of the three major ethnic groups must vote for it.

In essence, this means that, if two Council members coming from the same ethnic group do not support a decision, the decision cannot be adopted.

Proceedings before the Competition Council Are Limited in Time

As is the case in some other jurisdictions, proceedings before the Bosnian competition authority cannot go on forever. The law has set the maximum duration of the proceedings depending on the area of competition law they concern – restrictive agreements, abuse of dominance, or merger control.

In case the Competition Council is not able to complete the proceeding within the deadlines prescribed by the law, the effect depends on the type of the proceeding. For instance, if it does not decide on a notified concentration within the time frame set by the law, the concentration is deemed cleared by virtue of the law. And if it does not complete an abuse of dominance investigation within the deadline, it is deemed that no abuse of dominance had occurred.

It Happens in Practice: Two Cases in 2017

That the possibility of a blockade in the competition authority’s work is not just a theoretical prospect is evidenced by the fact that at least two cases which were before the Council during 2017 were ‘decided’ based on the ‘ethnic veto’ rule. Specifically, the Council failed to reach a decision in one merger control and in one abuse of dominance case, respectively. The result: the notified concentration was ‘cleared’ by virtue of the law and the abuse of dominance case had to be closed.

Things to Change in 2018? Amendments to the Competition Act on the Table

Towards the end of 2017, the Competition Council announced that an overhaul of the Bosnian Competition Act is in the pipeline. It remains to be seen whether the ‘ethnic vote’ rule will be among the parts of the law which will be amended.

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